"Money Market

Ill elaborate in the coming lecture. For the purposes of this question, it is sufficient to know that an investment period for less than a year uses simple interest. As you learned in class, simple interest multiples the interest rate by the time period. In the U.S. the time period for these money market instruments is measured as a fraction: the numerator is the precise number of days in the time period and the denominator is 360. For example, the interest earned on a 10-day investment at 3% is .03(10/360)investment.

You lend $1,000,000. What are the proceeds if:

a) You lend for 2 weeks at 5%

b) You lend for 1 week at 5%, receive your proceeds, and then roll over the proceeds at 5% for the next week

c) You lend for 1 week at 5%, receive your proceeds, and then roll over the proceeds at 6% for the next week

d) You lend for 1 week at 6%, receive your proceeds, and then roll over the proceeds at 5% for the next week

\"Money Market\" I'll elaborate in the coming lecture. For the purposes of this question, it is sufficient to know that an investment period for less than a year uses simple interest. As you learned in class, simple interest multiples the interest rate by the time period. In the U.S. the time period for these money market instruments is measured as a fraction: the numerator is the precise number of days in the time period and the denominator is 360. For example, the interest earned on a 10-day investment at 3% is .03(10/360)investment. You lend $1,000,000. What are the proceeds if: a) You lend for 2 weeks at 5% b) You lend for 1 week at 5%, receive your proceeds, and then \"roll over\" the proceeds at 5% for the next week c) You lend for 1 week at 5%, receive your proceeds, and then \"roll over\" the proceeds at 6% for the next week d) You lend for 1 week at 6%, receive your proceeds, and then \"roll over\" the proceeds at 5% for the next week